Tangible assets, such as fine art, wine, jewelry, antiques, sports memorabilia, classic cars and other valuables, have finally been recognized as an asset class in their own right. Yet high net worth individuals have too often neglected to manage and protect their treasures as carefully as they manage their financial investments or businesses.
The” blind spot” in managing assets is addressed in a new white paper released by ACE Private Risk Services, the high net worth personal lines business of the ACE Group, and Trōv, a technology company helping people collect and benefit from the information about everything they own. The white paper, Breakthroughs in Managing Tangible Assets: Completing the Picture of Wealth, explores the issues surrounding tangible asset management and presents seven steps for addressing them. These issues include: determining value and authenticity, keeping proper documentation, maintaining adequate insurance, and optimizing estate and tax planning.
“Tracking the value of everything you own on a regular basis has long been too cumbersome for most people, but without that information to share with your advisors, you’re likely to make important decisions incorrectly,” said Gary Raphael, senior vice president, Risk Consulting, at ACE Private Risk Services. “For instance, in a survey ACE conducted among wealthy collectors, nearly 40 percent did not have all of their precious items insured against property loss with a valuables policy. Many also fail to employ proper loss prevention techniques to protect their collections. One family mentioned in our white paper had a $70 million painting hanging by a single nail. Fortunately, new technology is making the tracking process more manageable and allowing ACE to develop innovative services that will help clients and their advisors craft tailored protection at a reduced cost.”
“Secure, cloud-based technology and new mobile applications are making it vastly easier to collect, update, and share information about your tangible assets on a daily basis,” said Scott Walchek, founder and CEO of Trōv. “Armed with this information, insurance advisors and carriers can better recommend the types and amounts of coverage required, as well as provide timely advice about preventing damage and theft. If a loss does occur, the claims process goes much more smoothly because all the documentation, including updated values, is readily available. Similarly, family offices, tax advisors, and estate planners can anticipate issues that arise with buying, selling, lending, and gifting valuable items, and recommend appropriate strategies – just as they do with financial assets. It’s a chance, finally, to complete the picture of total wealth management.”
The white paper and its findings also draw on the insights of industry experts, including representatives from Berus Law Group, Bonhams, The Conservation Center, The Family Wealth Alliance, Handler Thayer LLP, Pall Mall Advisors, Ronald Varney Fine Art Advisors and Rothstein Kass.
The need for high net worth families and their advisors to better manage and protect their tangible assets is underscored by new data included in the white paper. ACE Private Risk Services and Trōv have been collaborating on a program in which specialists have examined the contents of more than 3,000 homes of high net worth families. Among the findings: nearly 50 percent of the homes evaluated did not have enough insurance to cover their contents, and the average amount of underinsurance exceeded $415,000 per home. Through this program, homeowners and their insurance agents can for the first time make decisions about the amount of insurance required based on customized replacement cost estimates of personal property at policy inception.
Source: ACE Private Risk Services/Trōv
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